Family owned Dubai-based Future Pipe Industries (FPI) said on Sunday it is seeking to raise as much as $554 million in an initial public offering starting on Sunday, valuing the company at between $1.2 billion and $1.5 billion.
FPI has benefited from a surge in Gulf Arab spending over the last few years on infrastructure for towns and cities, as well for industries such as oil and gas.
London-based MEED magazine estimates Gulf Arab states and companies have announced during the last four years or are constructing projects worth more than $2 trillion, including $430 billion on oil and gas. FPI is maker of fibre glass pipes used in city infrastructure and industry.
"The world pipe market in 2006 was estimated to be worth over $120 billion, 80 per cent of which can be addressed by fiberglass as a pipe material," FPI Chief Executive Officer Rami Makhzoumi said in the statement.
"Fiberglass currently accounts for only 5 percent of that addressable market and this is where FPI's long-term growth opportunity lies," he said.
FPI, which is owned by Lebanon's Makhzoumi family, plans to sell as many as 84 million shares -- representing 35 per cent of the company -- at between $5.00 and $6.60 each, it said in a statement. The final price will be announced on or around April 30.
FPI is competing for funds with Dubai-based interiors contractor Depa Ltd, which is looking to raise as much as $516 million in an initial public offering this month.
Both companies are looking to list their stock on the Dubai International Financial Exchange (DIFX), with Depa seeking a secondary listing in London. The Depa sale to individual investors may end on Sunday. For FPI, it is on April 21.
Profit at FPI almost doubled last year to $69 million on a 57 per cent surge in revenue to $556.4 million, Makhzoumi said last month. The Makhzoumi family will use the IPO proceeds to diversify its investments, Makhzoumi said, declining to be more specific.
This will be the second company to list its ordinary shares solely on the DIFX, which Dubai set up in 2005 to encourage local companies to sell shares to the public, and for foreign companies to tap growing regional wealth.
Deutsche Bank AG, Citigroup Inc and Dubai-based Mashreq are advising on the FPI sale. The sale to individual investors ends on April 21.
The sale, the first by a family for the DIFX, is open to nationals of six Gulf Arab countries, including Saudi Arabia and Kuwait, and residents of the United Arab Emirates. It is also be open to global financial services companies.
FPI sells wide-diameter pipes in 50 countries, generating 76 per cent of its income in the Gulf. In 2006, it controlled 11.6 per cent of the $3.5 billion global market in fibre glass pipes, according to Makhzoumi. In the Gulf, that share was more than 50 per cent.
The 35-million strong population of the Gulf is growing as economies surge on a five-fold increase in oil prices during the last six years, and foreigners move to the region attracted by job opportunities and tax-free income.
In the Gulf, FPI's biggest competitor is the Saudi Arabian Amiantit Co, which is listed in the kingdom. Last year, it made a profit of 64 million riyals ($17.07 million), according to its website. (Reuters)
Future Pipe seeks to raise $554m